Applied Materials to invest $400 million in 4 years to build new engineering centre in India

US semiconductor company Applied Materials on Thursday announced its plans to invest $400 million over the next four years in a state-of-the-art engineering centre in India. 

In its first five years of operation, the centre is expected to support more than $2 billion of planned investments and create at least 500 new advanced engineering jobs along with potentially another 2,500 jobs in the manufacturing ecosystem, the company said in a statement. 

The decision comes after Prime Minister Narendra Modi held discussions with Applied Material's CEO Gary Dickerson during their meeting in Washington on Wednesday. The PM extended an invitation to Applied Materials to strengthen India’s chip industry, the company added. 

This announcement comes alongside several other important deals that were announced in the tech sector this week. General Electric (GE) has entered into a partnership with state-owned Hindustan Aeronautics Ltd to jointly produce jet engines for the military.  

Furthermore, chipmaker Micron revealed its plan to invest $825 million in the construction of a new assembly and test facility in Gujarat.  

The chipmaker on Thursday confirmed a $2.75 billion semiconductor testing and assembly facility — the first commercial one of its kind in India. The move marks the first approval under the Centre's $10 billion production-linked incentive (PLI) scheme, announced initially in December 2021.The facility will enable assembly and test manufacturing for both Dynamic random-access memory (DRAM) and NAND products, and address demand from domestic and international markets. 

Meanwhile, Tesla CEO Elon Musk also met PM Modi this week and expressed his company's intention to establish a presence in India ‘sometimes soon’. The discussions between Modi and Musk have opened up prospects for future developments in the automotive sector. 

Prabu Raja, President of the Semiconductor Products Group at Applied Materials, said in a statement, “We envision Applied’s strong base of engineering talent collaborating more deeply with domestic and global companies operating in India to strengthen the foundational equipment supply chain serving the global semiconductor manufacturing industry.”  

Currently, Applied Materials operates across six sites in India and maintains strong partnerships with academic institutions such as the Indian Institute of Science in Bangalore (IISc) and the Indian Institute of Technology (IIT) Mumbai. 

India has been actively promoting semiconductor development and has introduced a production-linked incentive (PLI) scheme for the purpose. The country also gearing to position itself as a key investment destination for electronics and semiconductors. 

Experts believe that setting up semiconductor units, also known as fabs, is a highly specialised, complex, and expensive endeavour. These fabs require advanced technology, involve inherent risks, and demand long gestation and payback periods. 

It is known that the world is facing a crisis fuelled by geopolitical tensions, which continues to impact the global chip shortage. As a result of this, the West intends on reducing its reliance on China and Taiwan, as tensions continue to grow and supply chains in these regions become even more fragmented. 

This investment in India comes at a time when the country’s semiconductor demand is projected to skyrocket. According to a report published by India Electronics and Semiconductor Association in May last year, the Indian semiconductor market was valued at $27.2 billion in 2021 and is expected to grow at a CAGR of nearly 19% to reach $64 billion in 2026, nearly tripling its current size of $22.7 billion. The telecom stack and industrial applications in the country will account for two-thirds of the total market share, the report said.